Ask Colin

TRADING PLAN

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  1. What is the optimum number of trades? (question answered Dr Alexander Elder)
  2. Canyou advise me on starting out as a trader?
  3. How canI adapt your risk management for my trading plan?
  4. I see Ansell as a stock ready to buy, but how would your approach be to adding this stock to a portfolio?.  
  5. Is there a general approach to testing a trading plan?
  6. I have read many articles that refer to trading plans, but have yet to see an example of one. I don't have a trading plan, but I am not sure where to start. Can you help?
  7. How much weight do you give to the US market in deciding market exposure in your trading strategy?
  8. How does your ten-year learning idea relate to Gladwell's 10,000-hours rule?
  9. How do you deal with the situation where a stock has broken below the trendline but resumes it's uptrend?
  10. If a share drops suddenly with no chance to exercise my stop loss, should I sell the next day, or wait for a rally, closing the gap, and then sell?
  11. Shares magazine gave your predictions a bit of a drubbing in the February 2005 edition. How do the large losses in some predictions fit with your investment plan?
  12. I have been developing my trading plan. When does one know to fix a method in concrete & stick to it?
  13. What is your primary reason to buy and sell?
  14. You wrote an article in Shares magazine on 5 and 22-day moving averages. In your portfolio you have purchased ABC Learning Centres (ABS) on 10 March 2004. However, applying the moving averages, the trend has failed. What is the reason for holding those shares?
  15. Do you attend annual meetings of companies?
  16. Do you do any research in the Peter Lynch style " kicking the tyres"?
  17. Do you do any research in the Philip Fisher style "Scuttlebutt"?
  18. I do find the thought of selling my CBA (with its capital gain and ever increasing dividends) quite difficult. How do you decide when to sell?
  19. When does a long-term holder sell one of his favoured long-term investment (dividends in retirement) stocks? I ask this in view of the HIH debacle.
  20. I notice you have held Noni B (NBL) since February 2003. Why did you not sell in October or November 2003?
  21. I have capital of only $50k. Is your maximum investment of $6k in one stock appropriate, or should I go larger?
  22. I sold shares that later rose. The missed gains would have exceeded losses on the rest. Should I have just held them all?
  23. Can you recommend a book to help me develop or learn to develop a trading plan?
  24. In Mark Douglas' words, I am 'living by the results of the last trade'. I do not take buy signals after losses and then force winners by taking profits too soon. Can you suggest anything?
  25. What is an appropriate exposure to the share market now (November 2002)?
  26. Where is the fine line between cutting losses and having the patience to allow your trade time and room to work?
  27. What indicators should I use in forming a trading plan to identify buy and sell signals?
  28. Your trading plan says to sell downtrending and non-performing stocks in a bear market. Should I do this now (May 2002)?
  29. I was interested in your 'Trading' column in November Shares magazine where you talked about market panics and specifically your experience with Boral (BLD). As the price hit your stop level you sold as per your plan. So, without taking up too much of your time: (1) when do you consider buying again? (2) Have you bought back into Boral? Or are you waiting it out to see if the downward trend in the general market continues?
  30. I would like to ask regarding how to set a profit target once I have entered into a trade. I have often lost my potential profit where I sometimes get out to early or stay too long in the market. How do you manage this kind of situation?
  31. I have been trading shares 10 years and futures for about 4 years. When I started in the futures market I lost a lot of money listening to the broker so I stopped trading and built my own methods on trading the futures. Now I have this mental problem on being able to push the buttons thinking maybe this is the wrong one take the next so on so on.
  32. Could you please look at the chart for Hardman-HDR an explain what if anything I did wrong. I bought at 10:25 for 73c and sold half an hour latter for 67. At the close last night it was over 80c. My questions are these (1) Did I buy at the wrong time? (2) Did I sell too early (these questions are asked because in hindsight, that morning was a feeding frenzy). (3) Was what happened something that a trader could not prepare for: The market was very strong. If I can understand what happened and why, learning the skills to be able to control my financial future is one step closer, to becoming a reality.
  33. What are the ingredients for a good trading plan?
  34. In the article Trend Trader you state that the lack of a plan is a major reason why traders/investors fail. I have read this elsewhere and have heard it a sufficient number of times to believe it must be true. My problem is to work out what should go into a plan. Are there any examples of plans in any publications that may give me a clue as to what I should be putting into a plan? If I saw some sample plans I am sure it would help me understand the things I should be taking account. I have been searching for a couple of months now without success. Any light you can throw on this matter will be greatly appreciated.
  35. If I pass the study guide for Dr Elder's "Trading for a Living" will I be ready to start trading, or do I need more knowledge?
  36. How much understanding of yourself do you need, to know if trading suits your personality, temperament, etc.
  37. My portfolio has gone down by 30% (late March 2001). Should I wait for it to recover or should I cut my losses?
  38. I have a problem with PTD because the chart says I should sell, but the fundamentals look promising. What should I do?